Tag Archives: Credit Score

You’ve gotta have it, that shiny new car. It beckons your name the moment you wrap your hands around the leather-bound steering wheel.

The sales guy really wants to put you in that car today!

So you negotiate, and you drive a hard bargain (you’ve done your homework after all – already knowing what the car is ‘really’ worth)!

The next thing you know you’re being escorted to the finance office. It’s in the back, with no windows.

You feel imprisoned – like all the joy just left the room.

The finance officer pulls your credit report and gives you the news – you can have the car!

For $600 / month! What!?

You didn’t even think about the monthly payment when you went car shopping.

Turns out your credit score is below 680 and, well, you’re a credit risk – so your interest rate is through the roof.

Oh, the banks will give you the loan, but at an interest rate of 19.9%!

You feel shattered, broken. You leave – without the car.

What is a Credit Score, who is FICO anyway, and why did he steal your dream away?

A credit score is the most valuable tool in your financial arsenal. The most commonly used one is called the FICO score, but there are other ‘types’ of credit scores out there. Did you know that some prospective employers now look at your credit score to determine your ‘employment worthiness’?

Your credit score is used for all of your financial needs: applying for a credit card, buying a car, buying or renting a home or apartment, getting varies types of bank loans, obtaining insurance (yes, car insurance companies even look at your credit score now to determine your level of risk to them), and as I already mentioned, prospective employers take a peek too.

As you see by looking at the pie chart above – you need credit to get credit. Seems like a crazy concept, doesn’t it?

Additionally, once you start your grown-up financial life (aka, receiving and paying bills, yes paying those bills), someone’s been watching the entire time. Call him FICO or Big Brother, call him whatever you want. But he knows.

Your credit score is a reflection of all of your financial decisions in adulthood.

So how do you get a credit score, fix a credit score, and maintain a good credit score?

If you have a job, then you need to get a credit card as soon as you can, one with a small amount of available credit. But you must use it wisely or it can destroy your financial worthiness by tempting you with designer clothes or lattes!

Never use a credit card to buy something you can’t afford. If you can’t pay it off in full each month, then your credit card will hurt you before it helps you.

Get credit

Pay all bills timely

Credit score goes up

Overextend your credit card by racking up expenditures you can’t pay in full each month (or in two to three months for unexpected legitimate expenses, like car repairs or medical expenses) and you risk dragging your credit score down.